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How to win at benchmarking

When it comes to supply chain performance, one of the biggest stumbling blocks is measurement. A number of software programs are available to assist companies in benchmarking their supply chains against other companies. The Performance Measurement Group (PMG) (www.pmgbenchmarking.com), a subsidiary of PRTM, which was instrumental in developing the Supply Chain Operations Reference (SCOR) model, has a program whose core processes include supply chain operations, product development and customer life cycle management.

According to Ed Salley, president of PMG, the company's benchmarking software includes quantitative and qualitative data comparisons about practices and maturity and complexity, as well as actual performance on cost, quality and delivered performance.

In addition, it includes some degrees of assessment and recommendations on practices a company can consider implementing in an area where there is a perceived deficiency.

PMG was created about eight years ago to serve not only PRTM's data needs from a benchmarking and analysis perspective, but also to allow it to market and sell its benchmarking services directly and independently of PRTM. Much of PMG's analysis is based on the SCOR model.

SCOR, Salley explains, is a standard of practices or processes and performance measures. It was created about 15 years ago by PRTM,which ultimately decided it would be best if SCOR became an open standard rather than a propriety PRTM-owned standard. PRTM turned SCOR and its maintenance over to the Supply Chain Council (SCC) (www.supply-chain.org), whose members annually decide on changes to the model. The SCC has a number of companies, including PMG, who provide benchmarking services to SCC members at a discount fee, as a number of solution vendors now support the SCOR platform.

The company claims to have over 1,000 companies and supply chains in its databases, and PMG supports 14 different industry verticals, including pharmaceuticals, automotive, consumer products, and high-tech/computers.

"We're continuously refresh our databases, because if data gets old — anything over three years — it's no longer relevant," Salley explains.

Companies typically turn to benchmarking services because they suspect, but can't define, matters with which they're having difficulty, such as delivery performance, uncertainty, or an issue with costs or inventory that they're concerned about. They're confronting symptoms but are unsure as to the cause. For these companies, Salley notes, benchmarking is similar to a lab test.

"We use a decathlon analogy," says Salley. "A decathlete is not going to win every event. They will win the things at which they're most capable and have the greatest ability. But they have to be competitive in everything. We tell clients we don't know any company that is best in class in every operational performance metric. They know what they're already best at, so they must work hard to be competitive in the others. It's a pragmatic view."